GMX does not use an order book to create a trading market or AMM to make quotes, so theoretically, there is pelo slippage. As long as liquidity is in the liquidity pool, orders of any size can be absorbed instantly without impacting the market price.
GMX has improved the traditional Automated Market Maker (AMM) model by adopting a unique multi-asset liquidity pool model. This model allows users to deposit specified copyright assets into the liquidity pool and thus become liquidity providers.
EsGMX can also be vested over a one year period to yield regular GMX tokens. What makes this mechanism effective is that when esGMX is selected to be vested, the amount of GMX or GLP that was used to earn the esGMX is reserved.
Users can add liquidity by minting GLP, and in return, they receive 70% of all fees generated on the corresponding blockchain. Unlike some liquidity pools, GLP experiences no impermanent loss.
The fast completion and zero price shock nature of GMX exchange assets make it ideal for high-volume OTC transactions. Still, the downside is that the GLP liquidity pool has a small selection of assets, which limits its potential for non-popular, long-tail assets.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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On GMX, users can select a minimum leverage level of 1.1x their deposit and a maximum level of 30x on long and short trades.
Regarding protocol development, the GMX exchange has also issued GMX tokens. GMX tokens can be used for the protocol’s governance and staking, to adjust the rate structure and the weight of different copyright assets that affect the GLP liquidity pool, and to receive 30% of the transaction fees, funding rates, and clearing fees in the GLP liquidity pool. The proceeds are directly converted to ETH or AVAX.
GMX is powered by Chainlink Oracles. It uses an aggregate price feed from leading volume exchanges here to reduce liquidation risk from temporary wicks.
A liquidation occurs when a user’s collateral becomes insufficient to maintain a trade; the platform then forcefully closes the position and pockets the deposit to cover its losses.
Although the GMX protocol demonstrates strong potential and a positive development outlook, the market is always uncertain. Therefore, users must conduct comprehensive analysis and risk assessment before making investment decisions.
The demand for privacy-focused trading solutions has led to the rise of pelo-KYC platforms, which provide a vital alternative for those seeking to maintain anonymity while trading futures contracts.
The most important thing for an exchange is liquidity, which is needed to create a deep enough trading market to attract many people to use and generate revenue.